Investing in the renewable energy market in Africa?

Africa is moving. With a population set to double by 2040, the assessment is clear: the demand for energy will surge.

According to the African Development Bank (AfDB), Africa had 168GW total installed capacity in 2016 of which 33GW was installed renewable capacity. Installed renewable capacity is expected to triple by 2025.

Around $65-90 billion per year will be needed to achieve universal access to electricity across the continent.

Whilst the opportunities for investment are clear, investors are often cautious of the following points:

Choosing the right country

Africa’s 55 countries each exhibit unique regulatory and political environments, which greatly influence their investment attractiveness.

For example; the required returns for a project in Morocco, which has a relatively established regulatory environment, may be comparatively less than those required for a project in the continent’s youngest nation, South Sudan.

Choosing the right technology

New investors may need guidance as to which renewable technologies are best suited for the regulatory environments and resources available in each country.

The question then becomes, ‘how does one estimate the returns of an onshore wind farm in Kenya versus a solar project in Nigeria?’

Choosing the right project to invest in

Understanding project returns and costs of capital are critical for investment decision making. This information is notoriously scarce in a geography where secondary market transactions are limited – this is especially true in the African context.

Renewable energy survey

Renewables in Africa LTD and Grant Thornton LLP invites you to take part in the 2018 Grant Thornton Africa Cost of Capital survey, which attempts to answer these critical questions.

All responses will not be attributed to any individual or institution and the Report’s findings will be shared with all participants.

About the authors:

Tony Tiyou & Jade L Palmer

Tony Tiyou is the Founder and CEO of Renewables in Africa, a Clean Energy engineering consultancy and media platform. which vision is to transform Africa and Africans lives by leveraging the Power of Renewable Energy. Tony is the author of ‘The Wind Industry Outlook in Africa’, released in November 2017.

Jade Palmer is a manager in the Grant Thornton Valuations team focussing on infrastructure and renewable energy. Having started her career working in advisory throughout Africa, she maintains a keen interest in the development of the continent.

Ashley Theron-Ord is based in Cape Town, South Africa at Clarion Events-Africa. She is the Senior Content Producer across media brands including ESI Africa, Smart Energy International, Power Engineering International and Mining Review Africa.